Part III - Federal Workplace Regulation

This is the third installment in our series on potential changes ahead in the labor and employment area as a result of the 2008 election.  In addition to pursuing the legislative priorities described in Parts I and II, President-elect Obama has expressed a desire to increase the enforcement and inspection roles of various labor-related agencies with responsibility for regulating the workplace, including the Occupational Safety and Health Administration, the Wage and Hour Division of the Department of Labor and the Equal Employment Opportunity Commission.  Today, we examine the possible agendas of these three key agencies.

Occupational Safety and Health Administration

The Occupational Safety and Health Administration (OSHA) is the main federal agency responsible for providing employees with a safe and healthy workplace.  With an expansive legislative mandate from the Occupational Safety and Health Act (”OSH Act”), OSHA promulgates and enforces detailed health and safety regulations for nearly all working men and women.

Since Democrats took control of Congress in 2006, both the House and the Senate have pressured OSHA to become more aggressive in its enforcement activities.  Congress has held hearings and introduced legislation intended to encourage OSHA to issue more stringent citations and penalties on employers for violations of safety rules.

We expect that President-elect Obama will continue this trend during his administration.  In an April 2008 statement issued to the International Brotherhood of Boilermakers, then-Sen. Obama declared that “Congress must play a greater role in improving workplace health and safety.”  In addition, President-elect Obama supported increased funding levels for OSHA to improve the agency’s ability to reduce workplace injuries and fatalities.  President-elect Obama has also endorsed a number of substantive and procedural changes to OSHA policy that will materially increase the steps an employer must take to comply with federal health and safety laws.

A New Ergonomics Rule

President-elect Obama has promised to issue a new ergonomics regulation.  This regulation is likely to provide the same stringent requirements and broad scope of the controversial ergonomics standard that was issued near the end of the Clinton administration and then repealed almost immediately by President Bush and the Republican Congress.

After a long, protracted debate, on November 14, 2000, OSHA issued its Ergonomics Program Standard, which became effective on January 14, 2001.  This standard attempted to minimize musculoskeletal disorders engendered by low-impact, repetitive movements.  It broadly defined a “musculoskeletal disorder” as a disorder of the muscles, nerves, tendons, ligaments, joints, cartilage, blood vessels or spinal discs that affect the neck, shoulder, elbow, forearm, wrist, hand, abdomen, back, knee, ankle and foot.  In addition, the standard provided that musculoskeletal disorder injuries could be manifested by diagnoses including, but not limited to, carpel tunnel syndrome, rotator cuff syndrome, lower back pain, trigger fingers, tarsal tunnel syndrome, sciatica, tendinitis and herniated spinal discs.

On March 20, 2001, President Bush signed a congressional resolution that repealed the ergonomic regulations because of the substantial costs and compliance challenges it imposed on employers.  Businesses estimated that compliance with the new regulations would have cost as much as $100 billion.

Because the vote enacting the resolution fell along party lines during a period in which the Republicans controlled Congress, it is likely that President-elect Obama, with a Democratic Congress, will successfully issue a new ergonomics regulation.

Increased Civil Penalties 

President-elect Obama supports increasing the level of penalties OSHA can impose on employers who violate its regulations.  In his April 2008 statement to the International Brotherhood of Boilermakers, President-elect Obama stated “OSHA systematically imposes small fines on employers, even in cases where safety violations led to a worker’s death.  And it almost immediately discounts a fine if the employer contests it.”  Instead, President-elect Obama wants to reduce an employer’s ability to challenge the most severe penalties.  For example, he supports codifying OSHA’s egregious penalty policy, pursuant to which OSHA issues a penalty for each instance of noncompliance, instead of combining all instances into one citation, in situations where an employer flagrantly disregards its responsibilities to provide a safe and healthy workplace.  Currently, employers often successfully argue that the egregious penalty policy exceeds OSHA’s authority because neither the OSH Act nor any of the OSHA’s regulations mentions the policy.   Codification of this policy would hamstring employers’ ability to challenge OSHA’s enforcement efforts in cases where OSHA has used the egregious penalty policy.

In addition, President-elect Obama cosponsored the Protecting America’s Workers Act (S.1244), which would increase the limits on employer fines from $70,000 to $100,000 for “repeat” and “willful” violations.  Under the bill, the fines for “serious” and “other than serious” violations would increase from $7,000 to $10,000.

Enhanced Criminal Penalties

President-elect Obama would like to amend the OSH Act to strengthen OSHA’s criminal penalties in order “to enable the Department of Justice to prosecute a felony when an employer willfully causes death or serious bodily injury to a worker.”  Currently, the OSH Act allows for companies’ management employees to be imprisoned for up to six months for a “willful” violation that results in the death of an employee.  President-elect Obama supports a drastic increase to the maximum prison term for such violations.  For example, the pending Protecting America’s Workers Act would increase the term of imprisonment for these violations to ten years.

Increase in Workplace Inspections 

President-elect Obama also wants to improve OSHA’s process of inspecting workplaces.  He will encourage Congress to provide OSHA with funding to hire additional enforcement personnel to increase the number of workplace inspections, including inspections against repeat offenders under the Enhanced Enforcement Program, which OSHA uses to target its enforcement activities on employers with prior citations that have arisen out of inspections involving workplace accidents or fatalities.

Wage and Hour Division

The Department of Labor’s Wage and Hour Division (WHD) is responsible for enforcing federal law on minimum wage, overtime pay, recordkeeping, family and medical leave and child labor.  Under the Obama administration, the WHD would likely be more aggressive in its enforcement actions.

In a July 27, 2008 letter to the Department of Labor, President-elect Obama set forth his vision for a WHD that listens to worker advocacy organizations and more actively initiates its own investigations.  President-elect Obama also indicated his desire to expand the scope of WHD’s activities, criticizing the Bush administration’s emphasis on only four industries (agriculture, accommodation and food services, manufacturing, and health care and social services).  He also indicated his desire to increase funding for the WHD in order to actualize the enhanced role he envisioned for it.  With the support of a Democratic Congress, the Obama administration could make this vision a reality.

In addition to increasing the role of WHD, President-elect Obama will also likely push for two wage and hour-related legislative initiatives: increasing the minimum wage and instituting paid sick leave.

Minimum Wage Increase

President-elect Obama has written that “[e]ven though the minimum wage will rise to $7.25 an hour by 2009, the minimum wage’s real purchasing power will still be below what it was in 1968.”  Consequently, he wants to further raise the minimum wage to $9.50 an hour by 2011.  In addition to raising the minimum wage, President-elect Obama endorses a “living wage” where the minimum wage would be indexed to inflation.  Under a “living wage” paradigm, the minimum wage could then rise without subsequent Congressional action.

Paid Sick Days

Under the Family Medical Leave Act, employers are required to give employees up to 12 weeks of unpaid leave to deal with serious health conditions.  As a senator, President-elect Obama cosponsored the Healthy Families Act (H.R. 1542, S. 910), which would amend the FMLA to require employers to provide 7 days of paid sick leave for full-time employees (30 hours or more) and pro-rated paid sickleave for part-time employees.

Equal Employment Opportunity Commission

Under the Obama administration, the Equal Employment Opportunity Commission (EEOC) may affect employers in at least four ways: (1) increasing employer recordkeeping obligations, (2) adopting employee-friendly policies through interpretive guidance or litigation positions, (3) engaging in agency rulemaking and (4) increasing the focus on its “Systemic Initiative” for developing high-impact cases that identify systemic discrimination.

Expansion of Recordkeeping Obligations

Most employers are required to submit an Employer Information Report (EEO-1) to the EEOC on an annual basis.  The EEOC uses the data to support civil rights enforcement and to analyze employment patterns, such as the representation of female and minority workers within companies, industries or regions.  In 2003, the EEOC proposed revisions to the racial and ethnic reporting requirements, including expansion from five to seven identification categories.  Approved by the Office of Management and Budget (OMB) and made effective with the September 2007 reporting cycle, the EEO-1 form now requires an employer to provide race and ethnic information for the following categories:  White (not Hispanic or Latino), Hispanic or Latino, Black or African-American (not Hispanic or Latino), Native Hawaiian or other Pacific Islander (not Hispanic or Latino), Asian (not Hispanic or Latino), American Indian or Alaska Native (not Hispanic or Latino); and Two or More Races (not Hispanic or Latino).

The Two or More Races category, however, does not conform to OMB’s 1997 Standards for the Classification of Federal Data on Race and Ethnicity, which states that multirace responses should take the form of multiple responses rather than a multiracial category.  The EEOC may revisit the multiracial category issue in the coming months, as the EEO-1 form is scheduled for reauthorization by OMB in January 2010.  In addition, it is possible that OMB and the EEOC may seek to include additional ethnic categories.  Any change in the EEO-1 form or information collection processes would likely increase the recordkeeping burden on employers, who only recently adapted to the revised EEO-1 form.

The recordkeeping requirements with regard to Internet job applicants is another area where the burden on employers may be increased during the Obama administration.  The EEOC’s current guidance on employer obligations to retain applicant flow data and validation studies is contained in the Uniform Guidelines on Employee Selection Processes (UGESP), a 30-year old rule jointly issued with several other agencies, including the Office of Federal Contract Compliance (OFCCP), Department of Justice, and Office of Personnel Management.  In 2001, these agencies began considering whether additional recordkeeping guidance was needed in light of the growth of the Internet as a job search mechanism.  Although the agencies published a joint proposal in 2004 consisting of five draft questions and answers, the proposal was never finalized due to lack of consensus among the agencies.  In 2005, the OFCCP on its own published a final rule that addressed recordkeeping by federal contractors and subcontractors about the Internet hiring process and the solicitation of race, gender and ethnicity information from Internet applicants.

In March 2008, the EEOC took steps to ensure that the UGESP remained in effect through 2011.  However, Democratic Commissioners Stuart Ishimaru and Christine Griffin have both indicated their interest in having the EEOC address the Internet applicant issue on its own in the near future and expressed that the standards adopted by the OFCCP may not suffice for EEOC’s purposes, potentially putting employers in the difficult position-in which they are now with the Family and Medical Leave Act and the Americans with Disabilities Act-of having to comply with two overlapping standards that are either conflicting, inconsistent or, at least, inconsistently interpreted by different enforcement agencies.  As an example of the gap between agency rules, while the OFCCP rule addresses mining of databases (e.g., that of monster.com) for candidates, the UGESP rule probably does not reach so far.

Adoption of Employee-Friendly Policies and Litigation Positions

The EEOC has responsibility for interpreting and enforcing Title VII, the Americans with Disabilities Act, and certain other employee rights statutes.  In this role, the EEOC offers subregulatory guidance in such forms as the Compliance Manual, Enforcement Guidance and Policy Guidance documents, and takes policy positions in litigation through amicus briefs.  During the Bush administration, the EEOC has taken some aggressive positions in litigation, such as challenging releases as per se retaliatory, filing a pattern or practice suit for a retaliation claim, and espousing a new theory of “anticipatory retaliation” in the arbitration and retaliation context.  Under the Obama administration, the agency may expand litigation against employers who conduct pre-hire background investigations.  In addition, the EEOC may pursue more expansive retaliation claims, such as attacking no-rehire clauses as per se retaliatory.  Furthermore, in a more aggressive EEOC, the field offices may be subject to less oversight on their litigation decisions.

We have identified at least three specific areas that may be of interest to employers during the Obama administration: (1) discrimination based on caregiver status, (2) consideration of conviction records, and (3) use of credit checks.

In May 2007, the EEOC issued Enforcement Guidance regarding the circumstances under which discrimination against individuals with caregiving responsiblities for children, the elderly and individuals with disabilities might constitute unlawful disparate treatment.  The EEOC noted that caregiving responsibilities for children and the elderly disproportionately affect working women, and that their effects may be even more pronounced among some women of color.  The EEOC advised that employment decisions based on sex-based stereotyping about caregiving responsibilities violated Title VII.

On May 2, 2008, in Chadwick v. Wellpoint, Inc., No. 07-70-P-H (D. Maine), a District Court granted summary judgment to an employer who had allegedly denied a woman a promotion in favor of another lesser qualified woman based on the plaintiff’s parental caregiving obligations.  The court concluded that the plaintiff did not have sufficient evidence from which a jury could conclude that her supervisors considered her caregiving role as a female in their decision not to promote her.  Under the Obama administration, the EEOC may take the litigation position that, because women are overwhelmingly the primary caregivers for children, a decision with respect to a woman based on her caregiving status is evidence of unlawful sex stereotyping sufficient to defeat summary judgment.

The EEOC is presently examining two issues of importance to employers during the hiring process.  Employee advocates have challenged the use of conviction records and credit checks during the hiring process on the theory that such practices have a disparate impact upon minorities.  The EEOC has long taken the position that an employer may only disqualify an applicant or employee based on previous convictions if it takes into account the nature and gravity of the offenses, the time that has passed since the convictions or completion of the sentence and the nature of the job sought or held.  However, in El v. Southeast Pennsylvania Transport Authority, 479 F. 3d 232 (3d Cir. 2007), the Third Circuit declined to give the EEOC’s guidance deference because it had not substantively analyzed the statute in issuing its guidance and then found that the employer’s bright line policy did not violate Title VII.  During the Obama administration, the EEOC may issue guidance that makes it more difficult to use conviction records and credit checks as screening devices in employment decisions.

Rulemaking

In its rulemaking capacity, the EEOC can impact how an employer must implement new employment laws.  For instance, the recently passed ADA Amendments Act and the Genetic Non-Discrimination Act both require the EEOC to issue implementing regulations.

The ADA Amendments Act, which becomes effective on January 1, 2009, altered the definition of “disability” by rejecting certain Supreme Court decisions and portions of the EEOC’s ADA regulation.  While the legislation retains the basic definition of a disability as an impairment that substantially limits one or major life activities, the statute expressly directs the EEOC to revise the portion of regulations that defines “substantially limits.”  Although one would reasonably expect that the EEOC will issue some regulation by the end of the year to avoid having no position on the new definition, this definition may be further revised once the Democrats control the Commission.  Congress also directed the EEOC to issue, by May 2009, a final rule implementing the Genetic Information Non-Discrimination Act, which becomes effective in November 2009.

In March 2008, the EEOC published a notice of proposed rulemaking to address issues related to the Supreme Court’s ruling that disparate impact claims are cognizable under the Age Discrimination in Employment Act (ADEA).  That liability is precluded, however, when the impact is attributable to a “reasonable factor other than age,” a different and lower standard than the job-relatedness and business necessity test used in, for example, Title VII cases.  In its notice, the EEOC invited comments on whether it should issue regulations to provide more information on the meaning of “reasonable factors other than age.”  The EEOC has not issued any guidance, but in Meacham v. Knolls Atomic Power Laboratory, a case decided by the Supreme Court in June 2008, the EEOC took the position in an amicus brief that the “reasonable factor other than age” standard should be that “the challenged employment practice was reasonably designed to further or achieve an important and legitimate business purpose and was administered in a way that reasonably advances that purpose.”  Although the EEOC acknowledged that the reasonable factors test provides “narrower” disparate impact coverage for claims based on age than Title VII provides for claims based on race or sex, it nevertheless contended that its proposed reasonable factors standard is similar to the articulation of the business necessity standard in Wards Cove Packing Co. v. Atonio.

Finally, a Democrat-controlled EEOC may also revisit its December 2007 final rule under which it exempted from coverage of the ADEA the practice of altering, reducing or eliminating employer-sponsored retiree health benefits when retirees become eligible for Medicare or comparable state retiree health benefits.  Commissioner Ishimaru voted against the rule.

Expansion of  the Systemic Initiative

In 2005, the EEOC established its Systemic Task Force, which was charged with reassessing how the EEOC addresses systemic discrimination.  Systemic cases were defined as “pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location.”  Although the EEOC reiterated its belief in the value of the Systemic Initiative earlier this year, the scope of the initiative is limited in part by the funding of the agency.  If the Democratic Congress expands the commission’s resources as part of its overall agenda to expand and enforce the nation’s anti-discrimination employment laws, there will likely be an increased emphasis on the Systemic Initiative.

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In our next installment, we will focus on changes in traditional labor law which may occur at the agency level in the Obama administration, either through new DOL regulation or NLRB decisions.